The global container shipping industry is experiencing a significant surge in fleet expansion, according to recent data from BIMCO.
Despite initial signs of a slowdown in late 2023, the appetite for new ships remains strong, with year-to-date contracting in 2024 already surpassing the full-year total for 2023.
Since the start of 2021, the total contracted capacity has reached 10.47 million TEU (Twenty-foot Equivalent Units). The 1.59 million TEU capacity contracted so far in 2024 marks the third-highest figure since 2008, only surpassed by the first seven months of 2021 and 2022, according to BIMCO.
“When only six ships with a capacity of 4,746 TEU were contracted in the fourth quarter of 2023, many might have thought that the container ship contracting spree that began in 2021 had finally cooled. However, the appetite for new ships remains high and year-to-date contracting already exceeds the 2023 full year total,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.
The recent surge, combined with previous contracts, has led to a potential 44% increase in new capacity compared to the fleet size at the beginning of 2021.
However, actual fleet growth will depend on ship recycling rates. Since 2021, only 150 ships (0.24 million TEU) have been recycled, leading to a 25% fleet expansion and an increase in the average age of container ships from 13.0 to 13.9 years.
The current order book to fleet ratio stands at 22%, indicating potential for further fleet growth. This expansion has proven beneficial during the recent Red Sea crisis, which has increased demand for ships due to lengthened voyages.
Looking ahead, the fleet is expected to grow by at least 12% before the end of the decade, equivalent to an average annual growth rate of 2.4%.
“Although cargo volume growth might match that pace, we could see pronounced oversupply if fleet growth ends higher and the Red Sea crisis ends, lowering ship demand significantly,” says Rasmussen.
Source: g Captain
